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2016 (8) TMI 1054 - CESTAT MUMBAI

2016 (8) TMI 1054 - CESTAT MUMBAI - TMI - Taxability of collection of development fee from the passengers operational, management and development of airport - section 65(3c) of Finance Act, 1994 definition of taxable service - section 65(105)(zzm) of Finance Act, 1994 fundamental requirement of the demand of tax - Held that: - Section 67 defining value of taxable services for charging service tax says that the value of service shall be gross amount charged by the service provider for the s .....

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ded in favor of appellant. - ST/86390 to 86392/2014 - A/88830-88832/16/STB - Dated:- 28-1-2016 - Shri M V Ravindran, Member (Judicial) and Shri C J Mathew, Member (Technical) Shri V. Sridharan, Sr. Advocate with Shri Vinay Jain, Chartered Accountant for the appellant Shri V.K. Singh, Special Counsel for the respondent ORDER Mumbai International Airport Pvt Ltd, a joint venture of GVK Airport Holdings-led consortium and Airport Authority of India, entered into operational, management and deve .....

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ssenger and ₹ 600/- for every departing international passenger at Chatrapati Shivaji International Airport with effect from 1st April 2009 for a period of 48 months. 2. The Commissioner of Service Tax, in show cause notice dated 18th April 2011, demanded a tax of ₹ 54,68,47,002/- on the development fee of ₹ 5309194199/- collected between April 2009 and January 2011. The notice was adjudicated by Commissioner of Service Tax - I, Mumbai vide order-in-original no: 65/STC-I/SKS/11 .....

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Airport Ltd [2010 (17) STR J&( (SC)], Acer India Ltd and Orissa Cement Ltd v. State of Orissa & Ors AIR 1991 SC 1676 and various instructions issued by the Central Board of Excise and Customs. 3. Two more show cause notices covering the period from February 2011 to September 2011 for an amount of ₹ 10,98,55,657/- and for the period from October 2011 to February 2013 for an amount of ₹ 30,16,97,118/- dated 20th April 2012 and 18th April 2013 were also taken up for adjudication .....

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-tax valuation. 4. Learned Senior Counsel for appellant relies upon the definition of airport in section 65(3c) of Finance Act, 1994 and the taxable service in section 65(105)(zzm) to contend that the taxable activity cannot be said to have occurred as the collections are intended for future developments whereas the airport referred to in section 65(105)(zzm) is the existing airport. Drawing attention to the decision of the Hon ble Supreme Court in Consumer Online Foundation & Others v. Unio .....

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Airport Ltd v. Commissioner of Central Excise & Customs, Kochi [2007 (7) STR 468) (Tri.-Bang.)] iii. Commissioner of Central Excise v. Cochin International Airport Ltd [2009 (16) STR 401 (Ker)]. 5. Learned Authorised Representative relies upon decision of the Hon ble Supreme Court in Bharat Sanchar Nigam Ltd v. Union of India [2006 (2) STR 161 (SC)] with specific reference to paragraph 80: 80. … … … … In determining the issue, however the Assessing Authorities wil .....

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on in the impugned order that the appellant as well as the passengers did not entertain the idea that they were collecting or paying a tax when transacting in the development fee and thereby seeking to counter the plea on behalf of the appellant that this levy should have the status of a tax. 6. It would appear from a perusal of the impugned order that the adjudicating authority has overlooked the fundamental requirement of a demand for tax: articulation of the authority to levy that tax and the .....

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he superior appellate authority, appears to have proceeded on the assumption that he is a contributor to a law journal of review. He has specifically stated that the logic and allusions in the remand order do not convince him. We would appreciate it if the Chairman, Central Board of Excise and Customs were to direct the Zonal Members to accord some attention to the discharge of adjudication function by Commissioner in their respective jurisdiction. In our view, tax collection is normally routine .....

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is not susceptible binary disaggregation - transactions are not restricted to taxes and taxable consideration. A de novo adjudication following the setting aside of the original order is not to be restricted to an analysis of the decision of the remanding authority. The adjudicating authority has merely gone through the motion of discussing the various citations referred to in the remand order instead of proceeding in accordance with the direction of the Tribunal. The Tribunal had drawn specific .....

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development fee and consideration for a taxable service; it has proceeded on the assumption that the appellant, being a airport operator and subject to service tax, is required to pay tax on the entirety of its collection. These flaws render the notice and demand to be not tenable and the demand would fail on this count itself. 8. The tax authorized to be collected as per section 65(105)(zzm) of Finance Act, 1994 after 1st July 2010 is on service: to any person, by airport authority or any othe .....

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to travel by an airline that has the said airport as a scheduled port of call. The contractual nature of this relationship is enshrined in the ticket which provides access to the airport, process through check-in and security, space for waiting and necessary amenities and provision for boarding an aircraft. There is no assertion in the impugned proceedings that the passenger is required to effect payment for any of these activities. These facilities were available without any additional charge .....

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t and the ground facilities under the control of the Ministry of Civil Aviation. Air carriage was de-nationalised first and, in keeping with the evolving trend of autonomy for infrastructure sector, management of airports were consolidated under a single authority with the enactment of the Airport Authority Act, 1994. Later on, airport operators were brought into the legislative framework by incorporation of leasing mechanism. The appellant is one such. 11. Owing to this transition from being a .....

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t Authority Act, 1994. Despite the grant of financial autonomy the need for dependence on the State exchequer could not be eliminated and hence appropriate types of levies as well as restrictions on their utilization were incorporated in the statute. To be noted in particular was the control imposed on the collections that do not relate to commercial operations. The provisions of section 22 and 22A of the Airport Authority Act, 1994 should be viewed in the specific context of substitution of the .....

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afford the privilege of exercise of an option by the passenger and perforce enforced, without consent of the passenger, through the airlines on the basis of passenger data furnished by them on a fortnightly basis. The amounts so collected were placed in an escrow account owing to the restricted scope of expenditure being specifically enumerated in section 22A of the Act. There is, therefore, a substantive difference between a charge under section 22 and levy under section 22A. It could well be .....

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not established. The decision of the Hon ble Supreme Court in re Consumer Online Foundation (supra) makes it abundantly clear that development fee is a levy for a future establishment. This reinforces our conclusion that there are no services being rendered for which this levy is being charged. 14. It is the contention of the Learned Authorized Representative that with the striking down of this levy in the case of the appellant, the amounts so collected do not required to be utilized in a manne .....

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15. The decision of the Tribunal in Cochin International Airport Ltd v. Commissioner of Central Excise & Customs, Kochi [2007 (7) STR 468) (Tri.-Bang.)] affirmed by the Hon ble High Court of Kerala [2009 (16) STR 401 (Ker.)] and by the Hon ble Supreme Court [2010 (17) STR J79] has again clarified that the development fee is not linked to provision of service and hence not liable to service tax. The Hon ble High Court of Kerala had observed thus: … … … Even though Airpor .....

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